Correlation Between Malayan Banking and Systech Bhd
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Systech Bhd at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Malayan Banking and Systech Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and Systech Bhd, you can compare the effects of market volatilities on Malayan Banking and Systech Bhd and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Malayan Banking with a short position of Systech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Systech Bhd.
Diversification Opportunities for Malayan Banking and Systech Bhd
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malayan and Systech is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Systech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systech Bhd and Malayan Banking is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Malayan Banking Bhd are associated (or correlated) with Systech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systech Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and Systech Bhd go up and down completely randomly.
Pair Corralation between Malayan Banking and Systech Bhd
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.23 times more return on investment than Systech Bhd. However, Malayan Banking Bhd is 4.37 times less risky than Systech Bhd. It trades about 0.08 of its potential returns per unit of risk. Systech Bhd is currently generating about -0.03 per unit of risk. If you would invest 964.00 in Malayan Banking Bhd on November 3, 2024 and sell it today you would earn a total of 70.00 from holding Malayan Banking Bhd or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Systech Bhd
Performance |
| Timeline |
| Malayan Banking Bhd |
| Systech Bhd |
Malayan Banking and Systech Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Systech Bhd
The main advantage of trading using opposite Malayan Banking and Systech Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Systech Bhd can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Systech Bhd will offset losses from the drop in Systech Bhd's long position.| Malayan Banking vs. Public Bank Bhd | Malayan Banking vs. Hong Leong Bank | Malayan Banking vs. RHB Bank Bhd |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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